Capital gains tax calculator

How to use our Capital Gains Tax Calculator

Your Mortgage's Capital Gains Tax Calculator can help you estimate the CGT you may have to pay when you sell your investment property.

To use the tool, simply answer these questions:

1. How much did you buy your property for?

2. How much did you or do you plan to sell it for?

3. What is your taxable income, not including the capital gain?

4. How much did it cost you to buy and sell the property?

5. Have you owned the property for more than 12 months?

That final piece of the puzzle is important, as a 50% CGT discount likely applies if you have owned the property for more than 12 months.

Enter all those details and voilà! We'll provide you with an instant estimate of how much CGT you might need to pay.

What is a capital gain and CGT?

A capital gain is the profit you make from an investment.

For example, if you bought an investment property for $450,000 and sold it five years later for $520,000, you would have a capital gain of $70,000.

The home you live in isn't typically considered an investment and is generally exempt from CGT.

Capital gains tax, on the other hand, is the tax you pay on such profits. Though, it is commonly misunderstood.

CGT tax is not a separate tax; rather, it's submitted as part of your normal income tax. Any capital gains you make are added to your assessable income in the financial year you sell an asset (like a property).

This means capital gains are taxed at your marginal tax rate, rather than a special capital gains rate.

Capital gains tax example

Jenny plans to sell her Newcastle investment property in the financial year 2024-25. She bought the property in 2022 for $400,000 and expects it to be worth $450,000 today.

She estimates that, after adding the purchase and sale costs together, both transactions would have cost her a total of $5,000.

She also believes she'll realize around $40,000 of income from her job and $20,000 of rental income in the same financial year she sells the property.

To estimate how much capital gains tax she might be liable for in the financial year 2024-25, Jenny enters all her details into the Capital Gains Calculator above.

It shows that Jenny will likely realize a $45,000 capital gain from the sale, after accounting for transaction costs.

Because she held the property for more than 12 months, she will only pay tax on half of that - $22,500.

So, Jenny's taxable income will be $82,500 ($22,500 + $40,000 + $20,000). Her taxable income will fall into these brackets:

Now we know that, without considering particulars like the Medicare Levy, Jenny will probably pay approximately $7,000 extra in tax if she were to realize a $45,000 capital gain in the financial year 2024-25.

Can you be exempt from paying capital gains tax?

But selling a property doesn't mean you'll definitely be liable to pay tax on capital gains.

There are several instances in which you may be exempt from paying CGT.

For starters, you don't have to pay CGT if you make a loss on a sale or if you're selling your home.

A special rule applies when you rent out a property that you recently called your home. If you move out of a property and tenants move in, you will be exempt from paying CGT if you sell within the following six years. However, this exemption only applies if you don't reside in another property that you own while the property is being rented out.

It is important to note that when your primary residence is also your principal place of business, you will be charged CGT for the portion of the property that is used to produce income.

How to minimise capital gains tax?

The best way most people can work to minimise their CGT is to be organised.

Keeping accurate records likely allows you to claim more of your cost base. Any costs you incur can be added to your cost base, which could substantially lessen taxable capital gains.

You might also be able to minimize your CGT by owning an investment (like a property) for at least 12 months. Doing so will automatically grant you a 50% discount.

What is a capital loss?

A capital loss occurs when you sell an asset for less than what you bought it for, after considering your cost base (costs to maintain the asset).

If you make a capital loss, you won't be charged any extra tax since you didn't make a profit.

The silver lining of realising a capital loss is that it can be used to reduce the tax payable on other capital gains. Net capital losses in a tax year may be carried forward indefinitely. However, these losses cannot be offset against your regular income.

For example, if you made a capital loss of $20,000 last year and recorded a capital gain of $25,000 this year, you would only pay tax on $5,000 of this year's capital gain.